Choose the correct answer A, B or C from the list opposite.

1 In many ways life for previous......................was

much more difficult.

2 Home......................has increased in many parts of Europe.

3 When the economy grows dangerously fast, we say it.......................

4 A......................is when the economy is growing quickly.

5......................are fairground rides like trains that go up and down very fast.

6......................in technology in the last 30 years has been incredible.

7......................is when you get better after something bad like an illness – or economic depression.

8 When you......................you fight or work hard for something.

9 Don’t buy anymore milk. We’ve got......................in the fridge.

A fortunate person is very.......................

11 Mountain climbers are people who enjoy a…….

12 The......................is the government minister responsible for the economy.

13......................growth is growth that can continue for a long time.

Now read the text again and choose the sentence which best summarises each paragraph.

PARAGRAPH 1

A Economic growth does not happen everywhere.

B Economic growth did not happen in the past.

C Economic growth happens only in pecializingd countries.

PARAGRAPH 2

A GNP and economic growth are the same thing.

B An increase in GNP always means the

economy is growing.

C An increase in GNP may not show economic growth.

PARAGRAPH 3

A All growth is good. B Fast growth is good.

C Steady growth is good.

PARAGRAPH 4

A The majority of economists believe three factors positively influence economic growth.

B Economists are sure about what causes economic growth.

C Economists have no idea about what causes economic growth.

PARAGRAPH 5

A_ The economy needs more raw materials to grow.

B The economy needs more machines and factories in order to grow.

C The economy needs more labour to grow.

PARAGRAPH 6

A For economic growth there needs to be more spending and less saving.

B For economic growth there needs to be more saving and less spending.

C For economic growth there needs to be the right amount of saving and spending.

PARAGRAPH 7

A Technology creates more raw materials with less labour.

 B Technology creates greater output from the same amount of capital, labour and materials.

C Technology creates more labour with fewer raw materials.

Discuss this question with your partner.

What do you think makes an economy grow?

 

Text 7. The open economy

 

All through history, people from one society have been trading with people from another. Three thousand years ago, for example, the Phoenicians of the Mediterranean built an economy almost completely on foreign trade. In the jargon of economics, the Phoenicians had an open economy, and almost every economy since theirs has been open too.

When an economy is open, this basically means that it imports and exports goods and services. What are the benefits of doing this? First of all, if you trade with other economies, you can import goods that do not exist in your economy. These may be products that your economy cannot manufacture, but they may also be raw materials. With a wider range of raw materials, an economy is able to use its capital and labour to produce a wider range of products. In this way, importing can actually help an economy grow. What’s more, if you allow imports from other countries, then you will have trading partnerships. This means that you can export to countries. If you have customers all over the world, your economy will grow faster.

Open economies arc good for consumers, too. If the economy allows imports from abroad, there will be a greater variety of goods available locally. When products arc available locally, imports of the same products should help to keep prices down and quality high. This is because local companies will have to compete with foreign companies, and more competition will mean better quality and greater value for money.

Economists describe imports and exports of material products as visible – because you can really sec and touch them. Examples of visible exports and imports are food stuffs, furniture and electronic equipment. However, there are also invisible imports and exports. These are mainly services, but can include all sorts of things. Examples of invisible exports and imports include banking services, insurance products, educational courses and tourism.

Opening up economies, however, does bring problems. One of the main difficulties is keeping a good balance of trade. Every time a country manages to sell a product or service abroad, this means money will flow into the economy. On the other hand, every time someone buys from abroad, money flows out of the country. Over time, if the flow of money out of the economy is greater than the flow of money into the economy, then there is a trade deficit. This is not a good situation to be in. The challenge for governments is to keep the flow of trade equal in both directions, or to achieve a trade surplus. This is when total exports are greater than total imports.

  Exercices

 

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